JOYN’s perspective on the Dow’s historic 20,000 closing — “Dow 20k” — was featured in Russell Grantham’s front-page story in The Atlanta Journal-Constitution.
While financial watchers and politicians are busy celebrating this historic breakthrough, our Chief Investment Officer Aradhana Kejriwal said not to break out the party hats and confetti just yet:
I think the market is emotional and very giddy. Trump’s policies are not even clear and we don’t even know if they’re going to be implemented or when. We caution investors that market sentiments can change on a dime.
“Dow 20k” represents an emotional milestone for investors, but little has changed. Investors expect that anticipated tax cuts, trade policies and/or deregulation will spur domestic growth, but will those expectations come to fruition? The future is unknowable.
U.S. markets are getting frothy. Valuations are on the rise relative to the market’s historic norms.
The U.S. has experienced an extended bull market of nearly 8 years. The markets could continue their run. Yet markets can and do revert to the mean. No one knows when that reversion will happen, but history tells us that it will.
The reality is that human emotion — positive and negative — drives much of our decision-making — and rarely for the better. We caution investors to take a long-term, value-based approach rather than ride the highs and lows of an emotional roller coaster.